Crypto Taxes in Hong Kong: Complete 2026 Guide

Crypto Taxes in Hong Kong: The Complete 2026 Guide

 

Quick Summary

Hong Kong does not have a dedicated cryptocurrency tax law, nor does it impose capital gains tax. Instead, crypto taxation depends on whether the activity constitutes a trade or business. Profits derived from crypto trading, mining, or related activities may be subject to Profits Tax if they arise in or are sourced from Hong Kong. The Inland Revenue Department (IRD) applies long-standing tax principles under the Inland Revenue Ordinance (Cap. 112), supported by Departmental Interpretation and Practice Notes (DIPN).

 

How Hong Kong Classifies Cryptocurrency for Tax Purposes

 

Crypto as Property (Not Legal Tender)

Cryptocurrencies are not recognised as legal tender in Hong Kong. The IRD generally treats cryptoassets as property rather than money or securities. Tax treatment depends on the nature of the transaction and whether the taxpayer is considered to be carrying on a trade or business.

 

Key Legal Framework

Hong Kong’s crypto tax treatment is derived from:

• Inland Revenue Ordinance (Cap. 112) – core profits tax legislation
• DIPN 39 – guidance on the distinction between trading profits and capital gains
• IRD administrative practice – case-by-case interpretation

 

Taxable Crypto Events in Hong Kong

 

1. Crypto Trading as a Business

If cryptocurrency transactions are frequent, organised, or conducted with profit-making intent, the IRD may regard the activity as a trade. In such cases, profits are subject to Profits Tax.

 

2. Long-Term Investment Holdings

Crypto held as a long-term investment may be treated as a capital asset. Since Hong Kong does not levy capital gains tax, gains from genuine capital investments are generally not taxable.

 

3. Crypto Received for Goods or Services

When crypto is received as payment for goods or services, its value in Hong Kong dollars (HKD) at the time of receipt is treated as taxable business income.

 

4. Mining and Staking

Mining or staking activities carried out on a commercial scale may constitute a business, making related income subject to Profits Tax.

 

5. Professional or Corporate Activity

Companies operating crypto exchanges, custodial services, or market-making activities are taxed under standard corporate profits tax rules.

 

Crypto Tax Rates in Hong Kong

 

Profits Tax Rates

When crypto profits are taxable, the following Profits Tax rates apply:

• Corporations: 16.5%
• Unincorporated businesses: 15%

 

No Capital Gains Tax

Hong Kong does not impose capital gains tax. This is a key advantage for long-term crypto investors whose activities do not amount to trading.

 

Reporting Requirements for Crypto in Hong Kong

 

Profits Tax Returns

Businesses and individuals carrying on a trade must report crypto-related profits in their Profits Tax Return filed with the IRD.

 

Source of Profits Principle

Only profits sourced in or derived from Hong Kong are taxable. Determining source involves examining where trading operations are carried out.

 

Record-Keeping Obligations

Taxpayers should maintain detailed records, including:

• Transaction histories
• Wallet and exchange statements
• HKD valuations at transaction dates
• Business activity documentation

 

How Losses on Crypto Are Treated

 

Business Losses

If crypto activity is classified as a trade, losses may be deductible against assessable profits under Profits Tax rules.

 

Investment Losses

Losses on capital investments are generally not deductible, consistent with the absence of capital gains taxation.

 

Special Cases: NFTs, Airdrops & DeFi

 

NFT Transactions

NFTs are treated as digital property. Profits from frequent NFT trading may be taxable, while long-term investment disposals are typically not.

 

Airdrops

Airdropped tokens may be taxable if received as part of a business or promotional activity. Casual or non-commercial receipts may fall outside the tax net.

 

DeFi Activity

Income from DeFi protocols may be taxable if it arises from business-like activities. Each case is assessed based on substance rather than form.

 

How to Prepare Crypto Taxes in Hong Kong

 

Assessing Trading vs Investment

The most important step is determining whether crypto activity constitutes trading. Factors include frequency, intention, holding period, and organisation.

 

Using Crypto Tax Tools

Crypto tax software can help consolidate transaction data, calculate HKD values, and support documentation in case of IRD review.

 

Penalties for Non-Compliance

 

Failure to report taxable crypto profits may result in penalties, additional tax assessments, and interest. The IRD has the authority to request transaction records and conduct audits.

 

Conclusion

 

Hong Kong remains one of the most attractive jurisdictions for crypto investors due to the absence of capital gains tax. However, trading and business-related crypto activity may still be subject to Profits Tax. Correctly classifying activity and maintaining thorough records are essential for compliance.

 

References / Sources

 

• HKICPA – IRD Guidance on Cryptocurrency Taxation
• KPMG – Taxation of Digital Assets in Hong Kong
• IRD – Departmental Interpretation and Practice Notes No. 39
• Inland Revenue Ordinance (Cap. 112)